Stalemate between LNM and PHS over social package

Negotiations between LNM, a potential investor in Polish Steel Mills (PHS) and PHS labor unions, were supposed to come to an end yesterday. According to Rzeczpospolita, no agreement concerning the social package for the employees was reached. The settlement is a key issue in the privatization of PHS. According to an earlier agreement with the European Commission, 6,000 employees out of the current 19,900 are to be laid off by 2006. According to recent reports the expectations of the labor unions, which were estimated by LNM at $316 million rose fourfold. A few days ago, State Treasury Minister Piotr Czyżewski, announced that they are in negotiations with bank PKO BP concerning a loan for PHS amounting to around zł. 400 million. The funds are to be used for financing current operations. LNM is interested in the purchase of a stake of 70% of PHS, with the value of the transaction estimated at over $1 billion. (Rzeczpospolita, p. B5; Puls Biznesu, p. 6) A.K.